Game giant Valve recently released its sophisticated new free animated movie making program called Source Filmmaker and judging by the first results coming from the tool, it could massively impact the entertainment space over the coming years. Machinima, the art of making short (or long) movies using animated game engines, has been around for a good few years, but this is the first system which offers everything a budding movie maker needs, including motion capture and sound editing tools, to create a polished and sophisticated title, with relatively little expense or expertise.

Right now, the product is restricted to a fairly small set of in-movie assets, all based around Valve’s massively popular Team Fortress game environment, with the result that early offerings feature the usual machine gun toting, running slashing characters in various guises. However, the developers have made it clear that just as with the game code itself, anyone can modify the characters, settings, maps and props to create their own world, and what’s more they can then make a movie which they can charge money for…become a proper commercial movie director and producer in other words.

This wouldn’t be so exciting if it weren’t for the fact that the other tools needed to produce professional movie results are also plummeting in price. For instance it’s now possible to employ slick looking motion capture techniques for hyper realistic character movement through using a $600 suite of software called iPi Motion Capture and a couple of Microsoft Kinect Cameras, which you can grab online or at any game store for around $100 each.

While it’s still early days, which makes it easy to scoff at grandiose claims for the future, it’s not difficult to imagine a time not that far ahead when there will be a huge ecosystem of tools, skills and enthusiasts creating full blown movies with all the entertainment value of a current Pixar or Disney production, and at a fraction of the cost.

The fact that Source Filmmaker has been released as a free product is almost guaranteed to drive adoption, and as more young talented creatives jump on board, it’s almost certainly going to result in the same kind of exciting advances as the modded games arena has seen. It is also true that story telling has always trumped technology, so the more people who have access to the tools, the more we’re going to see great stories emerge.

This is no overnight sensation, however. Machinima has been around since the late 90s, and as long as five years ago Edge magazine was still wondering where the future of this art form lay. What makes things different now is the massive power that comes with even the most basic computer. When you’ve got supercomputer processing available in a consumer grade graphics card, you’re going to be able to do things that earlier generations could only dream about.

So will these animated productions eventually replace Hollywood? Will we see a S1MONE type future, where our stars are virtual and the gossip unreality based? It’s still impossible to tell. The success of heavily computer intensive films such as Avatar may offer a glimpse of the future, but whether that will translate into completely generated characters instead of human is anyone’s guess. The Japanese already adore their digital idols, so maybe that’s the best indication we can have.